By Kiki Schirr, {grow} Contributing Columnist
Lately, there has been so much attention on direct to consumer brands — and with good reason! Boosted by the social distancing era, brands on Instagram, TikTok, and Shopify sites are flourishing. Savvy shoppers, investors, and marketers are all taking note.
The Direct to Consumer (D2C) sales model bypasses traditional retailers to sell directly through a website, or via social media channels like Instagram. D2C businesses usually only sell a single brand — their own! But there are many new manifestations of the mega-trend.
Nike was, as usual, ahead of the pack on this trend, which Mark and Brooke Sellas discussed in their Marketing Companion podcast. Nike launched their D2C strategy in 2017, calling the project the Consumer Direct Offensive and has had their thumb on the pulse of this trend ever since.
Other manifestations of direct to consumer include subscriptions to content that were once bundled by cable companies—specifically, signing up for Disney+, ESPN+, or even Paramount+?
Realistically, consumers are already exhibiting subscription fatigue so I doubt the success of Paramount Plus—while I can name a dozen Disney movies (and sing a song from each) I couldn’t tell you one movie that I knew was Paramount-branded without asking Google/DuckDuckGo for help.
Consider that a cautionary tale: to switch to D2C and you need to have established name recognition. Beginning as a D2C has some positioning advantages.
Direct to consumer as a side hustle?
Many new businesses have cropped up around this sales model, most notably through leverage of D2C referral programs. The Fascination is a curated site for trendy D2C brands, and is little more than an attractive landing page full of referral links.
More informal businesses capitalizing on these affiliate links include bloggers, newsletters, and pretty much any site that can post a tracked hyperlink—formerly-paper magazines with stellar reputations included.
Of course, this raises questions of impartiality. OneZero, a Medium publication, even went so far as to ask whether referral programs have ruined product reviews. Ultimately, the matter will be left to the FTC, which has already spelled out careful instructions on how to display affiliate links legally, but the guidelines are 12 dense pages of legalese and it’s clear that many bloggers skimmed the document, at best.
When running a marketing promotion with D2C brands, be wary of influencer marketing–affiliate link transparency is non-negotiable. If handled improperly, you could lose the trust of your community.
What are the limitations of selling direct to consumer?
When direct to consumer brands first emerged, investors lined up to give them money. However, the total addressable market for mattress delivery or for trendy eyeglasses is limited, a fact which many venture capitalists did not seem to anticipate.
Because D2C brands tend to be high-quality goods that appeal to a very particular consumer base, they are never going to be Tide or Coca-Cola, items found in every home. So while the market is correcting the unicorn valuations given to many of the early D2C brands, many investors have talked about “the end of D2C.”
Dismissals of the direct to consumer model are short-sighted. This HBR article discusses D2C as if the trend is dead and suggests methods to revitalize it in a new form. While the author makes excellent points about his narrow focus, he is still framing the model in terms of becoming a brand large enough for venture capitalists or other investors to profit from. It doesn’t acknowledge that being a small to medium sized business is a worthy goal or even that such companies exist at all.
However, for business owners and marketers, especially freelance marketers, keeping a company relatively small (small, as defined by VCs—remember that Casper’s disappointing third quarter 2020 revenue was still $123M) is perfectly acceptable. In fact, not working for a Proctor and Gamble or Amazon monolith of a company has its own appeal.
What does direct to consumer mean for marketers?
The good news for freelance marketers or social media strategists is that D2C brands rely heavily on digital marketing. You could even make a strong argument that any D2C would fail without a creative and community-savvy marketing strategist.
Most of what you’d do to promote a D2C brand is familiar—shape a strong brand identity, build a community around the product, connect directly and relate to the customer—all strategies that Mark has been shouting from the rooftop for years.
But researching past examples of D2C brand growth can also be invaluable. For the best case study of a small but growing D2C brand I’ve ever seen, read that article on Nerdy Nuts peanut butter. And if you haven’t already, sign up for The Hustle newsletter. Its quirky stories about business trends will both keep you entertained and up-to-date on niche data. (Dear FTC, that is NOT an affiliate link!)
Brands to keep an eye on
This is a list of key D2C brands with long histories, which can be researched easily:
- Warby Parker – Try on glasses at home
- Casper – Buying a great mattress, simplified
- Supreme – Streetwear, purchased by VF Corp (Vans, The North Face, Timberland) for $2.1B
- Allbirds – Wool sneakers that won’t stink
- Reformation – Sustainable dresses
- Glossier – Feedback-based beauty products
- Eloquii – Fashion for beyond size 12
- ThirdLove – Bras that actually fit
- Tieks – Fashionable purse-packable ballet flats
- Lola – Organic or ph-balanced women’s care products
- Bonobos – Menswear
- BlackMilk – Digitally printed leggings and other stretchy clothing
But also keep an eye on smaller brands. These companies aren’t trying to make a moonshot, but instead provide a wonderful experience:
- Taaluma Totes – Nomad backpacks that sponsor micro loans in developing nations
- Coffee By The Roast – Curated, difficult-to-procure coffees and unique blends
- Queen City Alchemy – Natural beauty products with a witchy flair, used TikTok to gain an audience outside of Cincinnati, OH. (note: while their SSL certificate is now expired on the main site, their cart is run by Squarespace and has proper security/SSL)
- Starface – Acne stickers shaped like stars
- Farrow and Ball – Eco-friendly historic paints and wallpapers
If you could work with any brand or product on becoming direct to consumer, which would you choose? Think carefully about how that brand would launch or differentiate itself online. This mental exercise is a fun way to keep your marketing skills sharp.
Or if you’re a student, it can be expanded into a portfolio piece. What you’ll want to make is a Go to Market Strategy (GTM Strategy). That link is Hubspot’s simple but thorough guide on how to make one.
Thank you for reading this post. I hope that it sparks ideas for you.
Kiki Schirr is a freelance marketer and writer who enjoys new technologies. You can email Kiki Schirr at her full name without spaces at Gmail. Just remember that she responds faster on Twitter.
Image courtesy Unsplash.com
